Talbot Financial LLC

Item 5 - Fees and Compensation
This section of the brochure describes how we are compensated for the services we offer.

Compensation Methodology and Rates
Clients are charged for our asset management services based on a percentage of the assets
being managed.

Assets Under Management                                Annual Fees
•   Equities & Fixed Income
       o Up to $10,000,000                                0.85%
       o Over $10,000,000                                 0.50%

•   Cash                                                  0.00%

The firm will, on occasion, choose to charge 0% on some assets due to special situations
such as holding restricted stocks for a client. Because we charge no advisory fees on cash
but have discretionary authority to manage your allocations to cash, we have a conflict of
interest as a result of choosing not to charge on cash. This is because we have a financial
incentive to keep you fully invested and to retain as little cash as possible. In general, we
advise to keep cash balances needed for ongoing liquidity requirements in accounts outside
of our management.

Your specific annual fee arrangement will be described in the written Investment Advisory
Agreement entered into between Talbot Financial and you. Investment advisory fees
charged by us are negotiable at our sole discretion. All clients do not pay the same fee. The
annual fee for our services is billed monthly, in arrears, based on the value of the account at
the end of the month. If the management agreement does not span the entire monthly
billing period, the fee will be pro-rated based on the number of days the account is open
during the billing period. Your account custodian will send client statements, at least
quarterly, showing all disbursements for the account including the amount of the advisory
fee, if deducted directly from the account. It is the shared responsibility of Talbot Financial
and you to verify the accuracy of the fee calculation as the account custodian will not
determine whether the fee has been properly calculated. See Brokerage Practices (Item 12)
in this brochure for more information about your account custodian(s).

You may terminate the Investment Advisory Agreement without fee or penalty by
providing written notice to Talbot Financial within five (5) business days from the
execution of the agreement. Thereafter, either party may terminate the Investment
Advisory Agreement by providing written notice.

Pricing of Publicly Traded Securities
Publicly traded securities in your account(s) managed by us are held at the custodian that
we recommend but is ultimately chosen by you. We use the securities pricing provided by
the independent qualified custodian for reporting and billing purposes. Publicly traded
securities are usually priced as of the end of business on the last trading day of the calendar
quarter. The custodian’s pricing policies are typically distributed on account statements.

How Clients Pay Advisory Fees
Fees are generally deducted directly from your custodial account. You provide your
qualified account custodian with written authorization to have fees deducted from the
account and paid to Talbot Financial. This authority is also found in the Investment
Advisory Agreement.

Other Types of Fees and Expenses
In addition to the investment advisory fees you pay to us, you will pay transaction fees
(commissions) to your custodian or broker-dealer for executing securities transactions and
charges for special services elected by you or Talbot Financial. These fees may include:

   •   periodic distribution fees

   •   electronic fund and wire transfer fees
   •   certificate delivery fees
   •   reorganization fees
   •   account transfer fees (outbound)
   •   returned check fees
   •   international security transfer fees
   •   overnight mail and check fees
   •   Rule 144 transfer fees
   •   transfer agent fees

This list is not meant to be all inclusive. Any fee on a special service incurred by the client
will be fully disclosed. Please refer to Item 12 of this document for an explanation of our

Item 7 - Types of Clients
This section of the brochure describes who we generally provide our services to.

We provide advisory services to a variety of types of clients including individuals, trusts,
and individual’s pension plan accounts.